Ask Question
BusinessBusiness
22 September, 03:19

Barton Industries has operating income for the year of $3,500,000 and a 36% tax rate. Its total invested capital is $20,000,000 and its after-tax percentage cost of capital is 8%. What is the firm's EVA?

+2
Answers (1)
  1. 22 September, 05:12
    0
    Economic value added = $640,000

    Explanation:

    given data

    operating income = $3,500,000

    tax rate = 36% = 0.36

    total invested capital = $20,000,000

    cost of capital = 8% = 0.08

    solution

    we get here EVA (Economic value added) that is express as

    Economic value added = Net Operating Profit After Taxes - Investment * WACC ... 1

    here net Operating Profit After Taxes = $3,500,000 * (1 - 0.36)

    net Operating Profit After Taxes = $2,240,000

    so from equation 1

    Economic value added = $2,240,000 - $20,000,000 * 0.08

    Economic value added = $2,240,000 - $1,600,000

    Economic value added = $640,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Barton Industries has operating income for the year of $3,500,000 and a 36% tax rate. Its total invested capital is $20,000,000 and its ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
What strategy should you use to obtain the lowest possible apr on a loan?
Answers (1)
If you have trouble finding a job because of a slowdown in the overall economy, we would say that you are
Answers (1)
Is the concept of a team bonding through the subjugation and humiliation of some of its junior members valid, or do these behaviors exist primarily for the amusement of the more senior members of the group?
Answers (1)
Anthony is contemplating selling the bonds he holds prior to their date of maturity. Which of the following may result in Anthony's bonds being worth less than their face value, if he decides to sell prior to the maturity date?
Answers (1)
g Skysong, Inc. lends Concord industries $40800 on August 1, 2022, accepting a 9-month, 9% interest note. If Skysong, Inc.
Answers (1)
New Questions in Business
The revenue recognition principle dictates that revenue should be recognized in the accounting records: a. when cash is received b. in the period that income taxes are paid c. when it is earned. d. at the end of the month.
Answers (1)
Which of the following involves trading partial ownership interests for capital? A) Equity financing B) Debt financing C) Partnership financing D) Corporate financing
Answers (1)
Rockingham Motors issued a 30-year, 8 percent semiannual bond 3 years ago. The bond currently sells for 103.1 percent of its face value. The company's tax rate is 34 percent. What is the aftertax cost of debt?
Answers (1)
Producer surplus is the area A. under the demand curve and above the price. B. between the supply and demand curves. C. below the price and above the supply curve. D. under the supply curve.
Answers (1)
Arthur made a bid at an auction by calling out the amount of $250. The auctioneer acknowledged Arthur's bid. There were no higher bids, and before the fall of the auctioneer's hammer, Arthur announced that he was withdrawing the bid.
Answers (1)
Home » Business » Barton Industries has operating income for the year of $3,500,000 and a 36% tax rate. Its total invested capital is $20,000,000 and its after-tax percentage cost of capital is 8%. What is the firm's EVA?
Sign Up Forgot Password?